The Federal Trade Commission (FTC) has initiated an investigation into several prominent companies regarding their use of customer data, algorithms, and artificial intelligence for personalized pricing strategies.
Eight companies, including Mastercard, JPMorgan Chase, Accenture, Task Software, McKinsey & Co., Revionics, Bloomreach, and Pros, received inquiries from the FTC on Tuesday. The agency is seeking information about the implications of these pricing methods on privacy, competition, and consumer protection.
These firms utilize data tools, commonly referred to as “surveillance pricing” or “dynamic pricing,” which allow them to display varying prices for the same products based on individual consumer characteristics such as location, demographics, credit history, as well as browsing and shopping habits.
Many of the organizations targeted by the FTC play a crucial role in managing transactions, sales, and pricing strategies for some of the largest companies globally. Task Software is known for its transaction management solutions, serving major hospitality brands like McDonald’s and Starbucks. Revionics specializes in retail price optimization software, assisting numerous global retailers, including Home Depot. Pros, which promotes itself as an AI-driven pricing solutions provider, has notable clients such as Nestlé, HP, and United Airlines, and partners with Microsoft on technology development.
The FTC aims to uncover the complexities of this “opaque market” that categorizes consumers to set targeted prices for various products and services.
“Companies that collect Americans’ personal information risk jeopardizing their privacy. There is concern that these firms may exploit this extensive personal data to impose higher prices,” FTC Chair Lina Khan stated. She emphasized that Americans have the right to know if businesses are using detailed consumer data to implement surveillance pricing practices, and that the FTC’s investigation will provide clarity on this opaque pricing environment.
The FTC is particularly focused on four main areas: the types of surveillance pricing products and services offered by each company, their data collection methods, customer and sales information, and the impact of these surveillance practices on the prices consumers ultimately pay.